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How To Post Debtor NSF Fees

This document explains how to process a check payment that has been returned to you as NSF, and how to charge an NSF fee to the account.

Let's assume that an operator posts a check payment to a debtor account. A few days later, the check is returned to you NSF. You process the check, including your NSF fee. Later on, you receive another payment from the debtor that covers both the NSF check and your NSF fee.

The steps for processing include:

  1. Posting the NSF check as an identical transaction but with a NEGATIVE amount.
  2. Adding an NSF fee to the debtor.
  3. Settling your accounts when a good payment is received.

To perform these steps:

* You must be familiar with the financial aspects of Collect! Posting transactions, setting up transaction types, and understanding statements and invoices in Collect! are all aspects of handling NSF payments.

* You need the proper transaction types in your system.

Three transaction types are used in the following example:

101 - Payment by Check
301 - NSF Charge due Agency
106 - Payment of Agency NSF Fee

* The original transaction for the check payment has to be entered in your system. If it has not been entered yet, then post the payment as outlined in How To Post A Debtor Payment.

The rest of this document walks you the processing steps.

tip.gif The step by step instructions may follow a different method of posting transactions than you normally use. Try working through these steps, as this is the basic method. Once this theory is understood, you can apply it to your own method of posting transactions.

Posting The NSF Check

Let's assume that a week has passed and the bank has returned a check to you NSF. You must reverse the original Payment transaction and also create a new transaction to add your NSF fee to the debtor's Owing.

A check payment entered in Collect! can be reversed by posting a reversal payment transaction. This is a payment transaction with the EXACT same dollar value, identical to the original amount posted as payment for the debtor. What makes it a reversal is that this time, the amount of the payment is entered as a NEGATIVE amount.

tip.gif For your accounting and paper trail, it is best to use for the reversal NSF transaction, the exact same Transaction Type as the initial payment, as well as the exact dollar value but as a NEGATIVE amount.

We will go to the Debtor and reverse the original payment. We will use the exact same Transaction Type and information, entering the same dollar value, but making it NEGATIVE. This reverses the payment.

That is, a Payment transaction is entered exactly the way it was first posted, EXCEPT, entering the amount in the TO US or DIRECT field as a NEGATIVE amount.

tip.gif If the initial payment was posted as TO US then the NSF transaction must be posted as TO US. If the initial payment was posted as DIRECT, then the NSF transaction must be posted as DIRECT.

1. Start Collect! and sign in as you would normally. Select Browse from the top menu bar and then select All Debtors from the drop-down choices. The list of all debtors will display.

2. Begin typing the name of the debtor you wish to post the payment to. As you type, Collect! will take you through the list and stop at the closest match.

3. Click on the debtor, or if the debtor is highlighted, just press Enter or F5 to open the Debtor form. The debtor you selected should be displayed.

4. Select the TRANSACTIONS tab to display the list of transactions for this debtor. Press F3 to enter a new transaction.

5. Enter 101 in the Type field. Or, press F2 to view the list of transaction types and select Code 101 from the list. Alternatively, you can setup a Transaction Type, such as 105, to post the NSF transaction. This can allow you to run a Contact Plan when the transaction is created that will post the NSF Fee automatically, setup a letter contact, and more.

6. Enter the amount of the original check payment, in the TO US or DIRECT field, but make it NEGATIVE.

7. Enter the POSTED Date as today's date or the date the amount was reversed from your bank account.

8. Enter the PAYMENT Date to match the Payment Date of the transaction being REVERSED. This links the NSF transaction to the original transaction so the payment breakdown is properly reversed.

tip.gif If you have multiple reversals on the same day for the same debtor, go to each of the Original Transactions and put numbers into the NSF Tag field and put the corresponding number into the reversal's NSF Tag field. This is a secondary link for multiple transactions.

9. Press F8 or OK to save the transaction and return to the Transaction list. Here, you should see the reverse entry.

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Adding An NSF Fee

To post NSF fees to a debtor, you must use a Fee Transaction Type. We will use the NSF Charge Due Agency Transaction Type that is in the Demonstration database. It is Type 301. By default, this adds a $25.00 NSF Fee to the debtor.

1 Select F3, or select the NEW button, to open a new Transaction form.

2. Enter 301 in the Type field. Or, press F2 to view the list of transaction types and select Code 301 from the list. Because this Transaction Type was set up previously, Collect! will fill in the following data automatically.

  • $25.00 NSF fee has been filled in as a NEGATIVE amount in the To Agency field.
  • Omit From Daily Cash Report is switched ON.
  • Omit From Client Statement is switched ON.


3. Press F8 to save the transaction and return to the Transaction List. The initial payment, the reversal and the NSF Fee transactions are all displayed in the Transaction list.

4. Select OK to return to the Debtor record.

5. Ensure that the money fields on the Debtor screen have all been updated correctly. If they don't appear to be correct, select the RECALC button on the lower right of the Debtor form.

6. If the totals still do not appear to be correct, select the TRANSACTIONS tab and open the posted transactions. Make sure that dates and settings are correct.

tip.gif If your NSF Fees are always the same, you can set up a transaction type for your NSF fees. You may edit the Type 301 transaction type by entering your own fee amount in the To Agency field. Make sure you enter it as NEGATIVE amount.

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Settling Your Accounts

When the debtor makes a "good" payment, you must post two entries, one for the principal amount and one to cover the payment of the NSF fee. (It is assumed that you have already posted a 301 NSF Charge Due Agency Fee transaction to the debtor's account when you processed the NSF check.)

To post the two payment entries at once, we use the Debtor Payments and Charges menu.

1. From the Main Menu, select the button labeled Daily Administration to display the Daily Administration menu.

2. Select the button labeled Payments and Charges to display the Payment and Charges menu.

3. Select the button labeled Debtor Payments and Charges to display the list of Transactions. Press F3 or the NEW button to display a new Transaction form.

4. Select the Debtor for whom you are posting the transaction.

To post a credit for the NSF Fee in the To Agency, we use a Payment type transaction -Type 106 in the Demonstration database. Collect! will fill in the Description, Credit and Commission fields automatically. This method hides the NSF fee collected by the agency from the client's statement while crediting the payment to the debtor's account.

5. When you are finished, press F3 to post another transaction. Select the Debtor's name.

To post a credit for the Principal, we use a Payment type transaction - Type 101 in the Demonstration database. In the field labeled To Agency, enter the amount of the payment that is applied to the debtor's Principal. This is entered as a POSITIVE amount and it decreases the debtor's Owing.

When you view the debtor's account, the Owing will reflect these two credits posted as payments to the account.

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Wrapping It Up

The methods outlined in this document give you an easy and effective way to process NSF checks received on your accounts. You can modify the transaction types or the settings used, if your needs require this. The steps would remain the same.

The steps are:

To reverse a payment, a negative payment is entered, for the same amount and of the same transaction type.

To enter an NSF fee, a fee transaction is posted.

When a "good" payment is received, two payments are posted - a check payment and an NSF fee payment.

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See Also

- Transaction Type Basics
- Transaction Type Samples

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